The Good, The Bad, and The Unconstitutional By LARRY M. ELKIN
I happen to believe that the Patient Protection and Affordable Care Act, widely though somewhat unfairly called “Obamacare” (“Democare” would be more accurate), is a very bad law. I think it will ruin the economics of health insurance by allowing healthy people to put off buying insurance until they are sick. I think it will lead many small businesses to drop health insurance for their employees entirely; I have already done that in my business. I think it will drive costs higher, not lower as its backers insist.
But I don’t think the law is unconstitutional, and I don’t think the Supreme Court, which is hearing three days of arguments this week, will strike it down. I don’t even think the law will survive on just a 5-4 vote. I doubt more than two or three justices will seek to overturn it.
This does not mean the Supreme Court will conclude that the health care overhaul is wise or good for the country. That’s not the role of a court. The only question is whether Congress was within its powers to write the statute that it wrote. And, unfortunately, it almost certainly was.
The key issue is the law’s mandate that all citizens obtain health insurance coverage or pay a penalty. Opponents say Congress overstepped the bounds of its constitutional authority. The law’s supporters argue that the mandate is within the power of Congress to tax and to regulate interstate commerce.
Interestingly, there likely would be less legal ambiguity if Congress had taken the more radical route of establishing a single-payer, national health care system, as many Democrats wanted. In that case, Congress would simply have been levying taxes to pay for a public good, as it already does in order to provide other government programs, including Medicare. While Medicare works by paying private practitioners, not by hiring doctors directly, that distinction holds little legal importance. In fact, for certain subsets of the population, including veterans and residents of some tribal reservations, the government already does provide health care directly through federally funded facilities. Many people would, and did, argue that a national health care system is not a good way to deliver the medical services Americans demand, but few would say it is unconstitutional. Medicare itself has never faced a serious constitutional challenge, and it has been on the books for nearly 50 years.
What makes the Affordable Care Act different is that, instead of requiring citizens to pay for health care collectively through taxes, it requires them to pay for it individually through premiums.
Those who consider the law unconstitutional call this an unprecedented intrusion into the private sphere. Never before, they say, has the government told people how they must spend their own money.
The problem with this line of argument is that it’s not true. If you have children, the government will enforce a certain standard of care for them. You have no choice but to feed, clothe and shelter your children – all of which costs money – lest the government take your children away and house them someplace else. The government will help you do these things if you can’t do it yourself, just as the new health law will subsidize the mandatory insurance purchase for those who cannot afford it.
The government requires me to buy seat belts as part of the price of a new car. It prohibits me from buying medications not deemed safe and effective by the Food and Drug Administration, and it even prohibits me from buying medications that are perfectly legal abroad and bringing them back the States. It prevents adults under age 21 from purchasing and consuming alcoholic beverages that are freely available to other adults. It prohibits selling cigarettes to minors and advertising cigarettes on television. All of these intrusions either require a purchase or prohibit a purchase. All are constitutionally allowed.
There also is not much difference between the insurance mandate of the Affordable Care Act and the theoretical operation of Social Security. In each instance individuals are required to pay for some benefit themselves – health insurance coverage or retirement funding – in order to avoid ending up in a situation of such misery that the government would be forced to provide for them. Of course, in practice, Social Security has become simply a welfare system in disguise, rather than a true individually-funded personal benefit managed by the government. But that’s irrelevant to the question of whether it would be constitutional if it operated in the way it is supposed to. Most people agree that it would be. And most Republicans would argue that it would also be legal, as well as preferable, for Social Security to require investment in privately run accounts, so individuals would truly save for their own retirements. This is hardly different from the health care insurance mandate.
Many Republicans know – regardless of whether they will say it – that everyone can and should be made responsible for providing for their own health coverage. And I suspect that many Democrats know – though almost none of them would say it – that the Affordable Care Act was hastily crafted and poorly thought out, with unanticipated consequences galore that are only beginning to emerge in thousands of requests for waivers and in the controversy over birth control coverage.
But the two parties have painted themselves into opposite, though equally inescapable, corners. Republicans are so committed to repealing the law that they cannot back up and admit that we still need to control costs and to bring millions of uncovered Americans into the health care payment system. The Republicans, therefore, are unable to propose any alternative solutions. Meanwhile, Democrats have put too much into the fight for the law to acknowledge that it is deeply flawed.
A Supreme Court ruling overturning the law would essentially be a call for a do-over. It would bail out both sides, giving them a chance to start fresh. A lot of people probably would like this. But that’s just not what courts are for.
The Supreme Court will likely rule by June. I think a do-over is not in the cards. The law that was passed is the one we’re stuck with. Now we have to figure out how to live with it.
Larry M. Elkin, CPA, CFP®, is president of Palisades Hudson Financial Group a fee-only financial planning firm headquartered in Scarsdale, NY. The firm offers estate planning, insurance consulting, trust planning, cross-border planning, business valuation, family office and business management, executive financial planning, and tax services. Its sister firm, Palisades Hudson Asset Management, is an independent investment advisor with about $950 million under management. Branch offices are in Atlanta and Ft. Lauderdale. Website:www.palisadeshudson.com.